Financial Statements: Notes 17-30

Date

20 October 1999

Note 17: Receipts to the Consolidated Revenue Fund

	1997-98 Estimate $	1997-98 Actual $	1996-97 Actual $
Receipts
Advances to the Australian Capital Territory Interest	3,321,000	3,320,582	3,320,582
Advances to the States under the Housing Agreements Interest Principal	145,700,000 70,400,000	145,687,049 70,432,056	148,441,133 67,677,972
Advances to the Northern Territory for Housing Interest Principal	1,606,000 377,000	1,608,044 374,878	1,624,187 358,735
Advances to the States under the Housing Assistance Act 1973 Interest Principal	193,000 96,000	203,438 96,022	207,131 92,329
Advances to the States under the States (Works and Housing Assistance) Acts Interest Principal	94,400,000 17,000,000	94,395,361 17,080,548	95,130,887 16,345,022
Advances to the States under the War Service Lands Settlements Acts Principal	736,000	736,060	709,456
Australian National Railways Commission Debt repayment	700,000,000	460,812,450	-
Banking Act 1959 — Unclaimed moneys	15,000,000	16,803,384	20,751,331
Bank dividends	1,200,000,000	1,700,000,000	2,135,807,027
Borrowing levy and guarantee charge on borrowings by Commonwealth Government Enterprises	7,500,000	5,256,153	8,383,867
Commonwealth Bank — Proceeds of sale	-	-	3,804,609,537
Commonwealth Development Bank — Proceeds of sale	-	-	12,500,000
Fiscal contributions by State Government	-	406,592,890	395,225,418
Housing Loans Insurance Corporation — Dividend and special annual payment Payment of reserves to the Consolidated Revenue Fund Premiums from old book stock Recoveries from old book stock	3,000,000 6,000,000 - -	6,728,000 251,672,927 8,561,778 1,737,339	5,752,000 - - -
Interest paid by States and the Northern Territory on other loans	388,385,000	566,898,890	469,289,046
International Monetary Fund Maintenance of value adjustment Remuneration	- 10,681,000	- 2,915,156	448,990,968 10,922,470

Loan management expenses — recoveries from the States and the Northern Territory	90,000	81,570	111,069
Loans Securities Amendment Act 1988 — receipts from swap counterparties	4,950,000,000	3,277,578,379	5,655,841,179
Loan PNG — Interest — Principal	3,582,000 69,400,000	3,578,426 69,400,000	5,760,200 -
Regulation of companies and securities	308,600,000	326,015,066	297,918,357
Royal Australian Mint and Coinage Trust Account — moneys in excess of requirements	64,000,000	49,000,000	55,000,000
Seigniorage payments - Gold Corporation	750,000	818,806	807,643
Miscellaneous	105,000	125,827	161,592
Section 31 of the Financial Management and Accountability Act 1997 — to be credited to Running Costs — Division 670	911,000	928,913	1,380,686

Total receipts	8,061,833,000	7,489,439,992	13,663,119,824

Note 18: Expenditure from Special Appropriations

	1997-98 Budget $	1997-98 Actual $	1996-97 Actual $
Expenditure from Special Appropriations:
Airports (Transitional) Act 1996 — former debts of the Federal Airports Corporation — Interest	48,800,000	51,133,618	4,950,000
Airports (Transitional) Act 1996 — former debts of the Federal Airports Corporation — Loan Management Expenses	-	-	8,185
Commonwealth Inscribed Stock Act 1911, Loans Securities Act 1919, Loans Redemption & Conversion Act 1921	9,183,550,000	15,141,784,855	9,767,391,569
Loans Securities Amendment Act 1988 payments to swap counterparties	4,775,000,000	3,118,861,511	4,834,623,221
Financial Agreement Act 1994 — Assistance for Debt Redemption	62,300,000	62,265,944	220,358,956
Loans Redemption and Conversion Act 1921	5,000	-	-
Moomba — Sydney Pipeline System Sale Act 1994	18,945,000	18,936,779	16,177,481
Financial Agreement Act 1994 — Commonwealth contribution to Debt Retirement Reserve Trust Account on State and Northern Territory Debt	10,410,000	10,395,310	12,583,805
Interest on Debt Retirement Reserve Trust Account Balances	829,000	269,233	633,828
Payment of Tax Receipt (Victoria) Act 1996	-	-	555,618,065
States Grants (General Purposes) Ac t 1993 and 1994	16,168,875,000	21,783,582,539	16,174,138,968
Asian Development Bank (Additional Subscription) Act 1995	2,195,000	2,424,381	2,169,883
Banking Act 1959	15,000,000	10,006,817	10,849,389
Commonwealth Inscribed Stock Act 1911, Treasury Bills Act 1914 — Payment of Special Bond premiums on redemption	5,000	149	408
European Bank for Reconstruction and Development Act 1990	-	-	1,535,539
International Monetary Agreements Act 1947	39,392,000	726,603,211	16,348,091
Proposed Multilateral Investment Guarantee Agency Act 1996	-	-	-
Qantas Sale Act 1992 — Qantas Debt Servicing	61,770,000	70,188,194	62,971,914

Total Expenditure from Special Appropriations	30,378,077,000	40,996,452,541	31,680,359,302

Note 19: Expenditure from Annual Appropriations

Ordinary Annual Services of Government Appropriation Act	1997-98 Budget Estimates Act No 1 $	1997-98 Additional Appropriations Act No 3 $	1997-98 Advance to the Minister for Finance $	1997-98 Total Appropriations $	1997-98 Actual Expenditure $	1996-97 Actual Expenditure

						$
Division 670 - Administrative
1 Running Costs	50,494,913	3,904,000	-	54,398,913	50,555,856	49,572,516
2 Other Services
01. Compensation and legal expenses	233,000	467,000	-	700,000	112,748	129,915
02. Loan management expenses	3,390,000	-	-	3,390,000	2,581,443	3,711,110
03. Overseas bond issues – Payments in respect of lapsed coupons	10,000	10,000	-	20,000	6,583	924
04. Australian National Railways Commission – Debt acquisition	1,035,100,000	174,000,000	-	1,209,100,000	923,812,450	-
05. Proposed new Housing Loans Insurance Company – Payments in respect of insurance claims	20,000,000	-	-	20,000,000	18,408,127	-
06. International Finance Corporation – Capital subscription	6,860,000	33,000	-	6,893,000	6,892,163	6,527,919
07. International Bank for Reconstruction and Development – Capital subscription	4,132,000	233,000	-	4,365,000	4,303,056	1,302,329

Division 673 – Australian Securities Commission
01. For expenditure under the Australian Securities Commission Act 1989	119,398,000	35,000	-	119,433,000	119,433,000	122,548,000

Division 674 – Companies and Securities Advisory Committee

01. For expenditure under Part 9 of the Australian Securities Commission Act 1989

811,000

818,000

Total – Appropriations Acts
No 1 & 3

1,240,428,913

178,682,000

1,419,110,913

1,126,916,426

184,610,713

	Act No 2	Act No 4
Division 976 – Capital Works and Services
1 Australian Securities Commission
For expenditure under the Australian Securities Commission Act 1989	5,778,000	-	-	5,778,000	5,778,000	7,249,000
Division 977 – Payments to or for the States, the Northern Territory and the Australian Capital Territory
01. Australian Capital Territory – Special revenue assistance	34,500,000	-	-	34,500,000	34,500,000	42,200,000
02. Companies and securities regulation – Compensation for loss of revenue	134,376,000	-	-	134,376,000	132,550,960	130,335,260
04. Payments to State Governments in lieu of stamp duty on Airport sales	-	96,100,000	-	96,100,000	94,400,000	-
Division 978 – Other Services
01. Contributions to the International Monetary Fund – Enhanced Structural Adjustment Facility	2,500,000	-	-	2,500,000	2,500,000	-
02. Ex gratia payment to approved charitable organisations or trust funds in memory of the Princess of Wales	-	550,000	-	-	-	-
04. Community education and information program on the tax system	-	-	250,000	250,000	57,194	-
Total – Appropriations Acts No 2&4	177,154,000	96,650	250,000	273,504,000	269,786,154	179,784,260

Note 20: Reconciliation of Agency Running Costs

	1997-98 Actual $	1996-97 Actual $
Running cost appropriation spent (Div 550-1)	50,555,856	44,312,694
Less: appropriation under the FMA Act section 31	(928,913)	(1,031,971)
	49,626,943	43,280,723

Add carryover 30 June	3,843,057	3,333,170
Less carryover 1 July	3,333,170	-
	509,887	3,333,170

Revenue from Government (per operating statement)	50,136,830	51,524,999

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Funds and Special Public Money

Loan Fund

	1997-98 Actual $	1996-97 Actual $
Receipts and Payments of Loan Fund
Receipts
Treasury Bonds	4,503,634,000	6,964,599,847
Treasury Notes	50,631,650,942	57,372,248,513
Treasury Bills – Internal	11,895,600,000	1,463,000,000
Treasury Indexed Bonds	695,727,157	770,416,201
Treasury (Adjustable Rate) Bonds	-	900,000,000
Premiums on issue of Commonwealth Securities	801,815,117	313,206,638
Total Loan Fund Receipts	68,528,427,216	67,783,471,199

Expenditure
Financial Agreement Act 1928, Act 1929, Act 1944, Act 1966 and Act 1976
Loan Flotation Expenses	121,046	136,862
Loans Redemption and Conversion Act 1921
Treasury Notes	53,540,947,994	59,187,732,743
Australian Savings Bonds	342,400	476,780
Special Bonds	3,670	13,590
Treasury (Adjustable Rate) Bonds	3,697,602,779	-
Foreign currency redemptions	230,619,753	749,281,825
Other	318	450
Treasury Bonds	4,768,015,625	4,229,252,351
Treasury Bills - Internal	1,463,000,000	3,456,000,000
Premiums on redemptions - Treasury Bonds	301,785,571	160,500,066
Premiums on redemptions - Treasury (Adjustable Rate) Bonds	23,434,902	-
Discount on redemptions - Foreign Currency	744,414	84,526
Total Redemptions	64,026,497,424	67,783,342,331

Total Loan Fund Expenditure	64,026,618,470	67,783,479,193

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Funds and Special Public Money (Continued)

Other Trust Moneys

Legal Authority - Financial Management and Accountability Act 1997, section 20.

Purpose - for the receipt of moneys temporarily held in trust for other persons.

	1997-98 Budget $	1997-98 Actual $	1996-97 Actual $
Balance at beginning of reporting period	13,000	13,000	13,000
Receipts	1,000	-	1,960
Expenditure	1,000	-	1,960
Balance at end of reporting period	13,000	13,000	13,000

Investment Transactions Account

	1997-98 Actual $	1996-97 Actual $
Investment balance at beginning of reporting period	-	-
Purchase of investments	10,000	-
Realisation of investments	-	-
Invested balance at end of reporting period	10,000	-

Cash balance at end of reporting period	3,000	13,000

Investments

The balance of investments at 30 June includes the following investments held in the corporate name of the Minister for Finance and Administration pursuant to subsection 39 (1) of the Financial Management and Accountability Act 1997.

Rate of Interest

Date of Maturity

Face Value of Investment

Cost of

Investment

Internal Treasury Bills

30 June 1999

10,000

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Funds and Special Public Money (Continued)

Services for other government and non-departmental bodies

Legal Authority - Financial Management and Accountability Act 1997, section 20.

Purpose - for the payment of moneys in connection with services performed on behalf of other governments and non-departmental bodies.

	1997-98 Budget $	1997-98 Actual $	1996-97 Actual $
Balance at beginning of reporting period	13,301	13,301	8,065
Receipts	471,000	333,550	395,101
Expenditure	471,000	327,388	389,864
Balance at end of reporting period	13,301	19,463	13,301

Investment Transactions Account

	1997-98 Actual $	1996-97 Actual $
Investment balance at beginning of reporting period	-	-
Purchase of investments	10,000	-
Realisation of investments	-	-
Invested balance at end of reporting period	10,000	-

Cash balance at end of reporting period	9,463	13,301

Investments

Rate of Interest

Date of Maturity

Face Value of Investment

Cost of

Investment

Internal Treasury Bills

30 June 1999

10,000

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Funds and Special Public Money (Continued)

Services for other government and non-departmental bodies - Australian Securities Commission

Legal Authority - Financial Management and Accountability Act 1997, section 60.

Purpose - for the payment of moneys in connection with services performed on behalf of the Australian Securities Commission.

	1997-98 Budget $	1997-98 Actual $	1996-97 Actual $
Balance at beginning of reporting period	157,702	157,702	352,654
Receipts	69,300,000	64,124,315	69,219,489
Expenditure	69,300,000	63,613,422	69,414,441

Balance at end of reporting period	157,702	668,595	157,702

Investment Transactions Account

	1988-89 Actual $	1997-98 Actual $
Investment balance at beginning of reporting period	-	-
Purchase of investments	660,000	-
Realisation of investments	-	-


Invested balance at end of reporting period	660,000	-

Cash balance at end of reporting period	8,595	157,702

Investments

Rate of Interest

Date of Maturity

Face Value of Investment

Cost of

Investment

Internal Treasury Bills

30 June 1999

660,000

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Funds and Special Public Money (Continued)

Trustee Companies (ACT) Deposits Trust Fund.

Legal Authority - Financial Management and Accountability Act 1997, section 20.
Purpose - for the purpose of the Australian Capital Territory Ordinance in relation to Trustee Companies.

	1997-98 Budget $	1997-98 Actual $	1996-97 Actual $
Balance at beginning of reporting period	121,213	121,213	149,140
Receipts	-	32,993	61,875
Expenditure	-	30,415	89,802

Balance at end of reporting period	121,213	123,791	121,213

Investment Transactions Account

Invested Balance at beginning of
Reporting period	121,013	121,013	148,940
Purchase of Investment	-	32,993	50,000
Realisation of Investment	-	30,415	77,927
Invested Balance at end of reporting period	121,013	123,591	121,013

Cash Balance at end of reporting period	200	200	200

Investments

The balance of investments at 30 June 1998 includes the following investments held in the corporate name of the Treasurer of the Commonwealth pursuant to subsection 10 (1) of the Trustee Companies Ordinance 1947 on behalf of the Trust.

Rate of Interest %	Date of Maturity	Face Value of Investment $	Cost of Investment $
6.25	March 1999	20,000	20,874
9.5	August 2003	10,000	12,119
7.0	April 2000	20,000	19,999
10.0	October 2002	20,000	20,599
7.5	July 2005	30,000	30,000
7.5	July 2005	20,000	20,000

Total		120,000	123,591

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Funds and Special Public Money (Continued)

Royal Australian Mint and Coinage Trust Account

Legal Authority - Financial Management and Accountability Act 1997, section 21.
Purpose - (a) payment for goods and services and salaries, wages and other expenses incurred for the production, supply, sale and distribution of coinage, medals, dies, plaques and other like items, and for any other activity entered into by the Royal Australian Mint as approved by the Treasurer, and (b) repayment of capital funds and payment of moneys in excess of requirements to the Consolidated Revenue Fund.

	1997-98 Budget $	1997-98 Actual $	1996-97 Actual $
Balance at beginning of reporting period	6,028,893	6,028,893	249,885
Receipts	79,000,000	58,984,306	69,129,412
Expenses	84,000,000	64,253,958	63,350,404
Balance at end of reporting period	1,028,893	759,241	6,028,893

Investment Transactions Account

	1997-98 Actual $	1996-97 Actual $
Investment balance at beginning of reporting period	-	-
Purchase of investments	750,000	-
Realisation of investments	-	-
Invested balance at end of reporting period	750,000	-

Cash balance at end of reporting period	9,241	6,028,893

Investments

Rate of Interest

Date of Maturity

Face Value of Investment

Cost of
Investment

Internal Treasury Bills

30 June 1999

750,000

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Funds and Special Public Money (Continued)

Debt Retirement Reserve Trust Account

Legal Authority - Financial Management and Accountability Act 1997, section 20.
Purpose - for the payment and receipt of moneys in accordance with the Financial Agreement Act 1994.

	1997-98 Budget $	1997-98 Actual $	1996-97 Actual $
Balance at beginning of reporting period	5,210,334	5,210,334	17,287,094
Receipts	761,798,000	2,045,394,033	781,714,331
Expenses	761,371,000	2,037,723,759	793,791,091

Balance at end of reporting period	5,637,334	12,880,608	5,210,334

Investment Transactions Account

	1997-98 Actual $	1996-97 Actual $
Investment balance at beginning of reporting period	-	-
Purchase of investments	12,880,000	-
Realisation of investments	-	-
Invested balance at end of reporting period	12,880,000	-

Cash balance at end of reporting period	608	5,210,334

Investments

Rate of Interest

Date of Maturity

Face Value of Investment

Cost of
Investment

Internal Treasury Bills

30 June 1999

12,880,000

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Funds and Special Public Money (Continued)

Loan Consolidation and Investment Reserve Trust Account

Legal Authority - Loan Consolidation and Investment Reserve Act 1955.
Purpose - for repurchasing or redeeming securities which represent a portion of the public debt of the Commonwealth.

	1997-98 Budget $	1997-98 Actual $	1996-97 Actual $
Balance at beginning of reporting period	3,827,132,114	3,827,132,114	2,848,034,375
Receipts	1,665,987,000	8,397,988,796	1,480,113,151
Expenses	-	4,015,484	501,015,412

Balance at end of reporting period	5,493,119,114	12,221,105,426	3,827,132,114

Investment Transactions Account

	1997-98 Actual $	1996-97 Actual $
Invested Balance at beginning of reporting period	1,527,178,532	2,836,207,621
Purchase of Investment	12,172,225,623	1,464,546,153
Realisation of Investment	1,480,939,069	2,773,575,242
Invested Balance at end of reporting period	12,218,465,086	1,527,178,532

Cash balance at end of reporting period	2,640,340	2,299,953,582

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Funds and Special Public Money (Continued)

Investments

The balance of investments at 30 June 1998 includes the following investments in Commonwealth Government Inscribed Stock held in the corporate name of the Treasurer of the Commonwealth pursuant to subsection 6(3) of the Loan Consolidation and Investment Reserve Act 1955.

	Rate of Interest %	Date of Maturity	Face Value of Investment $	Cost of Investment $
Treasury Fixed Coupon Bonds
	13.50	15 July 98	7,030,000	7,403,416
	14.50	15 Sep 98	1,790,000	1,920,120
	14.00	15 April 99	5,224,000	5,862,755
	13.00	15 Feb 00	123,588,000	143,345,181
	13.00	15 May 00	69,167,148	80,509,261
	7.00	15 Feb 01	23,132,700	24,129,477
	10.00	15 Oct 02	885,000,000	1,041,068,327
	5.25	15 July 03	27,076,600	25,374,842
	6.50	15 July 03	1,559,200	1,606,624
	5.40	15 May 04	10,500	8,478
	9.00	15 Sept 04	760,000,000	889,372,140
	7.00	15 July 05	2,000	1,927
	10.00	15 Feb 06	1,160,000,000	1,457,336,305
			3,063,580,148	3,677,938,853

Internal Treasury Bills
	1.00	30 Jun 1999	8,508,280,000	8,508,280,000

Total Australian Dollar Denominated Securities			11,571,860,148	12,186,218,853
Dutch Guilder Loans*
	8.25	1 Nov 1999	24,987,615	20,153,174
	7.25	1 Jan 2001	16,612,865	12,093,059


Total Foreign Currency Denominated Securities			41,600,480	32,246,233

Total Investments			11,613,460,628	12,218,465,086

*Converted at $A=NLG 1.2515

Note 22: Appropriation for Future Reporting Periods

The following table summarises appropriations for the 1998-99 financial year at 30 June 1998:

	1998-99 $	1997-98 $
Special Appropriations	39,864,078,000	40,996,452,541
Appropriation Act No 1#	351,190,000	1,126,916,426
Appropriation Act No 2#	159,805,000	269,786,154

	40,375,073,000	42,393,155,121

Note: Appropriations for 1997-98 include Appropriations Acts No. 3 & 4.

Note 23: Related parties transactions

The related party transactions with STOCP are as follows:

	1997-98 $’000	1996-97 $’000
Sale of goods and services
-coin sales	2,080	-

Other income
-profit share	618	-
-administration fee	357	-

Expenditure paid on behalf of the STOCP has been or is to be reimbursed	1,297	-

Receivables
- coin sales	196	-
- administration fee	89	-
- reimbursable expenditure	266	-

Note 24: Payments to the Commonwealth from Business Operations

	1997-98 $’000	1996-97 $’000
Seigniorage	47,434	55,754
Royalty on Numismatic Coin Sales	756	947
Rent reduction from previous year	-	385
STOCP royalty to Treasury	763	-
Loss from withdrawn circulating coin	(458)	(655)
Trust Fund surplus	321	(1,431)
Prior year adjustment to seigniorage	184	-

Actual surplus funds paid to the Commonwealth	49,000	55,000

Note 25: Executive Remuneration

The number of executive positions that received or were due to receive total remuneration of $100,000 or more:

	1997-98 Number	1996-97 Number
$100,000 to $110,000	15	6
$110,001 to $120,000	14	15
$120,001 to $130,000	4	8
$130,001 to $140,000	2	3
$140,001 to $150,000	3	4
$150,001 to $160,000	1	1
$160,001 to $170,000	-	4
$180,001 to $190,000	-	1
$230,001 to $240,000	1	-
$240,001 to $250,000	-	1
$260,001 to $270,000	1	-
	41	43

The aggregate amount of total remuneration of executive officers shown above.	*$5,086,764	$5,604,788

The aggregate amount of performance pay paid during the year to executive officers shown above.	-	$68,950

The aggregate amount of redundancy payments to the executive officers shown above.	$82,120	-

The definition of executive officer in the FMO effectively requires the number of qualifying positions to be reported, rather than individuals (ie individuals were not necessarily remunerated at the levels shown). This means that the remuneration for each position will reflect that of the substantive occupant and any officers who acted in the position.

Total remuneration includes actual salary, higher duties allowance, part day travelling allowance, employer superannuation component, separation and redundancy payments and an estimate of the non-salary component of the SES package.

In light of changes to SES salary arrangements resulting from the Treasury Certified Agreement, it was decided that no payment of performance based pay would be made for the cycle payable in 1997-98.

* 1996-97 figures included overseas allowances, which are NOT included in the 1997-98 figures.

Note 26: Services Provided by the Auditor-General

Financial statement audit services are provided free of charge to the Department. The trust account business, Royal Australian Mint, is required to remit an amount equivalent to the cost of its audit into the Consolidated Revenue Fund. The fair value of audit services provided was:

	1997-98 $	1996-97 $
Royal Australian Mint	70,000	70,000
Treasury	200,000	210,000

	270,000	280,000

Note 27: Act of Grace Payments, Waivers and Amounts Written Off

	1997-98	1996-97
	$	$
No Act of Grace payments were made during the reporting period.
Amounts written off in accordance with subsection 47 (1) of the Financial Management and Accountability Act 1997:
Theft of cash advance for travel	4,279	-

Administered

Waivers
Waivers of amounts owing to the Commonwealth were made pursuant to subsection 70C(2) of the Audit Act 1901. These were amounts payable by South Australia in relation to Commonwealth advances under the States(Works and Housing) Assistance Acts and Commonwealth-State Housing Agreements.

328,938,649

19,856,910

Note 28: Average Staffing Levels

Average staffing levels by program and in total were as follows

	1997-98 Number	1996-97 Number
Program 1: Treasury	480	523
Program 2: Royal Australian Mint	127	135

Total	607	658

Note 29: Financial Instruments Note: Departmental

(A) Terms, Conditions and Accounting Policies

Financial Instruments	Accounting Policies and Methods	Nature of underlying instruments
Financial Assets	Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.
Cash - at bank	Deposits are recognised at their nominal amounts. Cash is received during day-to-day operations by the Collector of Public Money.	The Department of the Treasury maintains a bank account with the Reserve Bank of Australia for the administration of petty cash and for the receipt and payment of moneys. The Royal Australian Mint maintains its own commercial accounts for the conduct of its business operations.
Receivables for goods and services	Receivables are carried at nominal amounts due less any provision for doubtful debts. A provision for doubtful debts is recognised when collection of the full nominal amount is no longer probable.	Credit sales are normally on 30 day terms.
Investments	The Royal Australian Mint and the Perth Mint have formed a partnership to market and distribute Sydney 2000 Olympic Coins. The Royal Australian Mint’s 50 per cent interest in the STOCP is carried at the lower of cost and recoverable amount. The Mint also has an investment of $750,000 in Internal Treasury Bills as at 30 June 1998.	The terms of the partnership are that any annual surplus will be retained in the partnership unless unanimously agreed by the partners.
Financial Liabilities	Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.
Trade creditors and accruals.	Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the entity.	Trade liabilities are normally settled on 30 day terms.
Finance lease liabilities	Liabilities are recognised at the present value of minimum lease payments at the beginning of the lease. Discount rates used are estimates of the interest rates implicit in the leases.	1998-99 is the final year of the lease and covers the lease of three photocopiers.

(B) Departmental Interest Rate and Credit Risk

1) Interest Rate Risk: The net fair values of cash and non-interest bearing monetary financial assets approximates their carrying value.

2) Credit Risk: The maximum exposure to credit risk at the reporting date in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the balance sheet. The Department does not have any significant exposures to any concentrations of credit risk. The maximum value of credit risk exposure does not take into account the value of any collateral or other security.

Note 30: Financial Instruments Note: Administered

(A) Terms, Conditions and Accounting Policies

Financial Instruments	Accounting Policies and Methods	Nature of underlying instruments
Financial Assets	Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.
Cash - at bank	Deposits are recognised at their nominal amounts.	The Department maintains two bank accounts with a commercial bank for the purposes of administering mortgage insurance policies written by the Housing Loans Insurance Corporation (HLIC) up to 12 December 1997 and a bank account for administering the wrap-up of the final accounts and other minor details up to the point of sale of the HLIC.
Cash - in trust accounts	Deposits are recognised at their nominal amounts.	The Department maintains two trust accounts within the Commonwealth Public Account. The Debt Retirement Reserve Trust Account (DRRTA) is held for the purposes of payment and receipt of moneys in relation to the redemption of Commonwealth Government Securities (CGS) on issue for the States and Territories. Interest earned is based on the RBA's Target Cash Rate and is paid monthly in arrears. Moneys are also held in the Loan Consolidation and Investment Reserve (LCIR) for the purpose of repurchase and redemption of CGS on behalf of the Commonwealth. Interest earned on the LCIR’s cash balances is included in the interest paid by the RBA to the Commonwealth on its overall cash balances.
Interest and dividends receivable	Interest is credited to revenue as it accrues. Dividends from the Reserve Bank of Australia are recognised when determination is made by the Treasurer.	Interest is receivable on Commonwealth Government Securities, Swaps and other loans. The basis of payment of dividends is a memorandum of understanding with the Treasurer.

Financial Instruments	Accounting Policies and Methods	Nature of underlying instruments
International Monetary Fund Moneys Owing	Amounts owing from the International Monetary Fund are credited to revenue as they accrue.	Where the IMF’s holdings of Australian dollars fall below a specified level, it pays remuneration on Australia’s average remunerated reserve tranche position. The rate of remuneration is equal to the Special Drawing Rights (SDR) interest rate (this rate is then adjusted for burden sharing). Remuneration is calculated and paid at the end of the IMF’s financial quarters.
Loans to State and Territory Governments	Loans are recognised at the amounts lent. Interest is credited to revenue as it accrues. In relation to non Commonwealth Government Securities collectability of amounts outstanding is reviewed at balance date. Provision is made for bad and doubtful loans where collection of the loan or part thereof is judged to be less rather than more likely. In rare circumstances, loan repayments may be waived.	Until July 1990, the Commonwealth borrowed on behalf of the State and Territory Governments and allocated a portion of the proceeds of its Treasury Fixed Coupon Bond raisings to those Governments to fund the redemption of previous allocations of Commonwealth Government Securities (CGS). The States and Territories are responsible for meeting all obligations as to interest and principal on the CGS on allocation to them in accordance with the provisions of the Financial Agreement Act 1994. In addition to the CGS, there are outstanding balances of loans raised specifically for the States. State and Territory Government loans include advances, not evidenced by the issue of securities, made for housing and specific purpose capital payments.

Financial Instruments	Accounting Policies and Methods	Nature of underlying instruments
Swaps	Swap principal associated with cross-currency swaps is recognised on a net basis using the cost method. Interest is credited to revenue as it accrues. The notional principal associated with interest rate swaps is not recognised as assets or liabilities.	The Treasury undertakes derivative transactions on behalf of the Commonwealth to assist with the management of market risk associated with the Commonwealth debt portfolio. The two main sources of market risk in respect of the Commonwealth debt portfolio are interest rate risk and exchange rate risk. The Treasury manages this market risk by managing the Commonwealth debt portfolio to a benchmark which reflects a portfolio composition that, ex ante, can be expected to minimise the cost of Commonwealth debt over the long term, subject to an acceptable degree of volatility in annual debt service costs. Derivative transactions offer a cost-effective means of managing the Commonwealth debt portfolio more closely in line with the benchmark than would otherwise be possible. Derivative transactions are currently limited to interest rate swaps and cross-currency swaps.
Investments - Quota International Monetary Fund	The investment is recognised as a monetary asset. It is denominated in Special Drawing Rights and is valued at the Australian dollar equivalent. Dividend income is not earned from this investment.	The Quota represents Australia’s membership subscription to the International Monetary Fund (IMF). Each member is required to pay to the IMF the amount of its initial quota and subsequent increases partly in the member’s own currency and the remainder in the form of reserve assets. A member’s quota is not increased until the member has consented to the increase.
Investments - International Financial Institutions	These investments are classified as non-monetary assets and recognised as at historical cost. Dividend income is not earned from these investments.	These investments represent Australia’s membership shareholding in the Asian Development Bank, the International Bank for Reconstruction and Development, the International Finance Corporation and the European Bank for Reconstruction and Development.
Financial Liabilities	Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.

Financial Instruments	Accounting Policies and Methods	Nature of underlying instruments
Grant liabilities	Grants are recognised as liabilities and expensed in the year in which the grant agreements are made	This represents Australia’s contribution to the Enhanced Structural Adjustment Facility (ESAF) of the IMF. The ESAF will enable the IMF to provide concessional funding to support medium term macroeconomic adjustment and structural reforms in low income members of the IMF facing protracted balance of payment problems. The ESAF will assist Australia to promote its international economic and aid interests with developing countries in the Asian region. Australia’s contribution involves $30 million to be paid in annual instalments of $2.5 million over a 12 year period.
Swaps	Swap principal associated with cross-currency swaps is recognised on a net basis using the cost method. Interest expense is recognised as it accrues. The notional principal associated with interest rate swaps is not recognised as assets or liabilities.	The Treasury undertakes derivative transactions on behalf of the Commonwealth to assist with the management of market risk associated with the Commonwealth debt portfolio. The two main sources of market risk in respect of the Commonwealth debt portfolio are interest rate risk and exchange rate risk. The Treasury manages this market risk by managing the Commonwealth debt portfolio to a benchmark which reflects a portfolio composition that, ex ante, can be expected to minimise the cost of Commonwealth debt over the long term, subject to an acceptable degree of volatility in annual debt service costs. Derivative transactions offer a cost-effective means of managing the Commonwealth debt portfolio more closely in line with the benchmark than would otherwise be possible. Derivative transactions are currently limited to interest rate swaps and cross-currency swaps.
Interest Payable	Interest expense is recognised as it accrues.	Interest is payable on Commonwealth Government Securities, swaps and other loans.
International Monetary Fund (IMF) Special Drawing Right (SDR) Allocation liability	This liability is recognised as a monetary liability. It is valued at the Australian dollar equivalent of its liability in Special Drawing Rights. Interest expense is recognised as it accrues.	The SDR allocation liability reflects the current value in Australian dollars of the Department’s liability to repay to the IMF Australia’s cumulative allocations of SDRs. Interest is payable to the IMF in relation to the amount by which Australia’s SDR holdings are below Australia’s net cumulative allocations.

Financial Instruments	Accounting Policies and Methods	Nature of underlying instruments
Provision for unclaimed moneys repayments	A provision is recognised at a nominal value representing the expected recovery of these moneys less refunds already made, based on an analysis of historical transactions	This comprises moneys which have been paid to the Commonwealth Government as unclaimed moneys in accordance with Section 69 of the Banking Act 1959. These moneys may be claimed by depositors or their legal representatives by applying to the bank concerned. Interest is not paid by the Commonwealth in relation to these moneys.
Commonwealth Government securities	Debt is measured at face value. Premiums and discounts in relation to such borrowings are netted and amortised over the life of the borrowing on a straight line basis.	The Department is responsible for advising the Treasurer on all aspects of debt management on behalf of the Commonwealth, including the issue of various borrowing instruments and the administration of the redemption of debt. The Department also administers the redemption of Commonwealth Government security debt on allocation to the States and Territories.
Loans - promissory notes	The promissory notes are measured at nominal face value.	The Department has on issue promissory notes to the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD) and the Asian Development Bank (ADB). These promissory notes are in relation to undrawn paid-in capital subscriptions. Promissory notes to the value of $3,480 million do not possess established drawdown schedules. The promissory notes are non-interest bearing.

(B) Derivatives - Notional Principal Amounts

(i) Interest Rate Swap Contracts
The Department has entered into interest rate swap contracts under which it is obliged to receive and pay interest at fixed and/or floating interest rates.
As at 30 June 1998, the notional principal amounts of the interest rate swaps, which have not been recognised as assets or liabilities, and their associated maturity were as follows:
	30 June 1998

	$'000
Less than 1 year	259,501
1 - 2 years	500,000
2 - 3 years	500,000
3 - 4 years	600,000
4 - 5 years	1,750,000
5 years and over	4,350,000
	7,959,501

(ii) Cross-Currency Swap Contracts
Swap principal and interest payable/receivable in relation to cross-currency swaps is disclosed in the financial statements on a net basis.
The gross amounts together with their carrying amounts in the financial statements are as follows:
	30 June 1998	30 June 1998
	Total Carrying	Gross Amount
	Amount	(Cost)
	$’000	$’000

Financial Assets
Swaps	26,899	11,272,792
Interest receivable - Swaps	62,120	349,665
	89,019	11,622,457

Financial Liabilities
Swaps	2,761,134	14,007,028
Interest payable - Swaps	22,493	310,039
	2,783,627	14,317,067

The Department is open to foreign exchange risk as a result of contractual obligations in relation to:
*cross-currency swap contracts;
*promissory note liabilities in foreign denominations; and
*foreign currency loans.
The exposure to the movement in the Australian dollar has not been hedged against. As at 30 June 1998, the following foreign currency assets and liabilities were not hedged:
	30 June 1998

	AUD $'000
Monetary liabilities
Current
United States dollars	1,039,917
Pounds Sterling	1,517
Hong Kong Dollar	17,021
Japanese Yen	19,684
Swiss Francs	33
Deutsche Marks	10
Netherlands Guilders	95,885
Special Drawing Rights	7,569
	1,181,636

Non-Current
United States dollars	2,690,954
Pounds Sterling	117,646
Euro	100,000
Japanese Yen	34,819
Netherlands Guilders	127,835
Special Drawing Rights	1,019,157
	4,090,411

Total monetary liabilities	5,272,047

Monetary assets
Current
United States dollars	3,472
Special Drawing Rights	7,411
Netherlands Guilders	3,634
	14,517

Non-current
Special Drawing Rights	5,053,498

	5,053,498

Total monetary assets	5,068,015

(D) Interest Rate Exposures

The Department’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and financial liabilities is set out below.
Financial Instrument	Floating Interest Rate	Fixed Interest Rate				Non-Interest Bearing	Total	Weighted Average Effective Interest
		1 year or less	1 to 2 years	2 to 5 years	> 5 years			Rate
	97-98	97-98	97-98	97-98	97-98	97-98	97-98	97-98
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	%


Financial Assets

Cash	8,792	-	-	-	-	2,641	11,433	4.94

Interest receivable (see Note 30B)	10,461	123,179	-	-	-	-	133,640	6.28

IMF Moneys owing	-	-	-	-	-	7,411	7,411	-

Swaps (see Note 30B)	-	3,472	-	-	23,427	-	26,899	6.62

Loans to State and
Territory governments	372,532	95,143	698,455	846,716	5,292,859	-	7,305,705	5.81

Other receivables	-	-	-	-	-	750	750	-

Investments	-	-	-	-	-	5,717,136	5,717,136	-



Total Financial Assets (Recognised)	391,785	221,794	698,455	846,716	5,316,286	5,727,938	13,202,974	-


Total Assets	-	-	-	-	-	-	23,990,816	-

Financial Instrument	Floating Interest Rate		Fixed Interest Rate				Non-Interest Bearing	Total	Weighted Average Effective Interest
									Rate
		1 year or less		1 to 2 years	2 to 5 years	> 5 years	97-98	97-98	97-98
	97-98	97-98		97-98	97-98	97-98	$'000	$'000	%
	$'000	$'000		$'000	$'000	$'000



Financial Liabilities

Grant liabilities	-	-		-	-	-	27,500	27,500	-

Swaps (see Note 30B)	2,027,279	173,610		30,220	241,500	288,525	-	2,761,134	5.78

Interest payable (see Note 30B)	62,445	2,288,605		-	-	755,430	-	3,106,480	7.72

IMF allocation liability	-	-		-	-	-	1,019,157	1,019,157	-

Provision for unclaimed
moneys repayments	-	-		-	-	-	41,392	41,392	-

Commonwealth
Government securities	4,672,532	19,375,002		9,792,561	18,649,426	43,915,050	-	96,404,571	7.14

Loans - promissory notes	-	-		-	-	-	3,523,963	3,523,963	-

Other	-	-		-	-	-	7,569	7,569	-

Total Financial Liabilities (Recognised)	6,762,256	21,837,217		9,822,781	18,890,926	44,959,005	4,619,581	106,891,766	-

Total Liabilities	-	-		-	-	-	-	108,404,486	-

(E) Net Fair Values of Financial Assets And Liabilities

	30 JUNE 1998 TOTAL CARRYING AMOUNT $'000	30 JUNE 1998 AGGREGATE NET FAIR VALUE $'000
Financial Assets
Cash	11,433	11,433
Interest receivable	133,640	133,640
IMF Moneys owing	7,411	7,411
Swaps	26,899	238,209
Loans to State and
Territory Governments	7,305,705	7,305,705
Other receivables	750	750
Investments	5,717,136	5,778,053
	13,202,974	13,475,201

Financial Liabilities
Grant liabilities	27,500	27,500
Swaps	2,761,134	2,173,947
Interest payable	3,106,480	3,106,480
IMF allocation liability	1,019,157	1,019,157
Provision for unclaimed moneys repayments	41,392	41,392
Commonwealth Government Securities	96,404,571	109,744,500
Loans - promissory notes	3,523,963	3,523,964
Other	7,569	7,569
	106,891,766	119,644,509

(F) Credit Risk Exposures

The Department’s exposure to credit risk at reporting date in relation to each class of recognised financial assets is the aggregate net fair value of those assets as indicated in Note 30 (E).

There is no credit risk exposure in relation to the notional principal associated with interest rate swaps.

The credit risk associated with Commonwealth Guarantees in respect of authorities within the Treasury Portfolio is shown in Note 16.

Financial Statements: Notes 17-30

Keep up to date with Treasury